Yet Another Divide!
Joe Rauch and Dave Clarke from Reuters report on another government divide that will extend the housing mess that we are in for a long time. Up until now, the main regulator for the largest US Banks was working in conjunction with the (50) attorney generals and a dozen federal authorities to reach a global settlement with the lenders that have caused this mess. Mr. Rauch and Mr. Clarke report that the Office of the Comptroller of Currency is pursuing their own settlement. This leaves the others out in the cold. Read the following passages from the article. They are eye opening.
“It’s such a political minefield that I could see something like this might cause the inventory of foreclosed homes to remain high for quite a bit longer.”
The source said the OCC, impatient with infighting over the structure of a coordinated settlement, is preparing to move on its own set of fines and business-practice fixes for banks.
While a settlement with the OCC would remove one question mark for banks, they could still face myriad suits from investors, homeowners and attorneys general.
Iowa Attorney General Tom Miller, who is heading up the states’ probe, issued a statement saying a settlement from the OCC would not derail the AGs pursuit of its own deal with the banks. “While it is unfortunate that the OCC may be heading toward a path of working outside and independently of other federal agencies, state attorneys general, we will continue our efforts to the fullest extent possible,” Miller said.
Those threats will keep gumming up the foreclosure process and could keep the housing market’s recovery in a holding pattern. Foreclosure tracker RealtyTrac reported that foreclosures in February 2011 were down 27 percent from the same month last year, in large part due to legal uncertainty.
An independent settlement from the OCC would likely be smaller in scope than a deal envisioned by other U.S. authorities that would have forced banks to pay about $20 billion — which would be used in part to help struggling homeowners — and agree to reduce loan balances to keep borrowers in homes.
The OCC settlement is expected to do little to help struggling homeowners, millions of whom are facing mortgages worth more than their homes.
The banks, the regulators and the attorneys general are all in a big piddling contest and that leaves consumers in the middle getting wet,” said Tony Plath, a banking professor at the University of North Carolina at Charlotte.
Analysts said multiple settlement agreements issued by federal and state authorities would also be the worst-case scenario for the largest U.S. banks, which would have to deal with a deluge of legal threats and reforms.”
It’s comical what our government continues to do to our economy. No wonder real businesses continue to move offshore!
Sure doesn’t look like it pays to take short cuts! What do you think?
Mortgage probe talks split, clouds market recovery
By Joe Rauch and Dave Clarke
CHARLOTTE, N.C./SAN DIEGO
(Reuters) – – The main regulator for the largest U.S. banks is preparing to break from state authorities and move first to settle with lenders over their foreclosure practices, according to a source familiar with the process.
The settlement from the Office of the Comptroller of the Currency could come in the next couple weeks, the source said and would dash hopes for a comprehensive settlement that could help heal the housing market.
About a dozen federal authorities and 50 state attorneys general have worked for months to reach a coordinated settlement over allegations banks foreclosed with improper documents and cut corners on repossessing homes.
The authorities were working to structure a settlement that would have let banks contain their litigation risk, help homeowners mistreated during foreclosures and remove a cloud of uncertainty hobbling the housing market’s recovery.
“It’s never great news when there’s no coordinated response to the greatest challenge in the economy,” said Adrian Cronje, chief investment officer at Balentine, an Atlanta-based wealth management firm.
“It’s such a political minefield that I could see something like this might cause the inventory of foreclosed homes to remain high for quite a bit longer.”
The source said the OCC, impatient with infighting over the structure of a coordinated settlement, is preparing to move on its own set of fines and business-practice fixes for banks.
The exact details of an OCC proposal are not yet known. OCC spokesman Bob Garsson declined to comment.
Bank of America Corp, Citigroup Inc and Wells Fargo & Co are among the banks in settlement talks.
While a settlement with the OCC would remove one question mark for banks, they could still face myriad suits from investors, homeowners and attorneys general.
Iowa Attorney General Tom Miller, who is heading up the states’ probe, issued a statement saying a settlement from the OCC would not derail the AGs pursuit of its own deal with the banks. “While it is unfortunate that the OCC may be heading toward a path of working outside and independently of other federal agencies, state attorneys general, we will continue our efforts to the fullest extent possible,” Miller said.
Those threats will keep gumming up the foreclosure process and could keep the housing market’s recovery in a holding pattern. Foreclosure tracker RealtyTrac reported that foreclosures in February 2011 were down 27 percent from the same month last year, in large part due to legal uncertainty.
CONSUMERS CAUGHT IN MIDDLE
An independent settlement from the OCC would likely be smaller in scope than a deal envisioned by other U.S. authorities that would have forced banks to pay about $20 billion — which would be used in part to help struggling homeowners — and agree to reduce loan balances to keep borrowers in homes.
The OCC settlement is expected to do little to help struggling homeowners, millions of whom are facing mortgages worth more than their homes.
The banks, the regulators and the attorneys general are all in a big piddling contest and that leaves consumers in the middle getting wet,” said Tony Plath, a banking professor at the University of North Carolina at Charlotte.
Analysts said multiple settlement agreements issued by federal and state authorities would also be the worst-case scenario for the largest U.S. banks, who would have to deal with a deluge of legal threats and reforms.
“The banks would rather their multiple regulators come together and coordinate, but it just seems like that’s not happening,” said Jefferson Harralson, a bank analyst with Keefe, Bruyette & Woods Inc.
GROWING TENSIONS
The OCC’s potential split is the latest symptom of the contentious, politicized debate about how best to fix the U.S. mortgage market and who should bear the losses for millions of foreclosed homes nearly five years after the housing market began to collapse.
In a sign of growing tensions among the authorities, on March 3, state attorneys general sent banks aspects of a proposed settlement endorsed by some federal agencies, but not the OCC or the Federal Reserve, the main banking regulators involved in the discussions.
The 27-page document proposed changes to how the mortgage servicing industry operates and advocated reducing loan balances for struggling borrowers as a way to help them avoid foreclosure.
Republican lawmakers and some state attorneys general have slammed that 27-page document, calling it an abuse of power.
A separate settlement from the OCC is also an example of the tense history between state attorneys general and the national bank regulator.
In 2005, the OCC sued then-New York Attorney General Eliot Spitzer, alleging Spitzer’s office was interfering with the regulator’s oversight of banks after he attempted to request bank records for review of potential anti-discrimination law violations.
At the time, Spitzer called the suit “shameful” and one that was designed to shield banks from state scrutiny.
Later that year, a New York federal court judge issued an injunction barring Spitzer from reviewing banks’ records.
Analysts said the possible settlement is the latest step in that regulatory fight.
“This is the OCC trying to take this issue back into Washington and take some of the steam away from the states,” Plath added.
(Reporting by Joe Rauch and Dave Clarke; editing by John Wallace, Gary Hill and Andre Grenon)